US chem stocks slide as Dow Jones closes at 11-year low

23 February 2009 22:08  [Source: ICIS news]

HOUSTON (ICIS news)--The Dow Jones Industrial Average set an 11-year low with its close on Monday, taking US chemical stocks on a continued downward slide.

The Dow Jones average fell 3.4% on Monday to close at 7114.78, or about 172 points below the 7286.27 it closed at on 9 October 2002.

Accordingly, shares of nearly all major chemical stocks fell, with Ferro ($1.52, down 22.5%), WR Grace ($5.71, down 14.4%), Mosaic ($35.89, down 15.5%) and Intrepid Potash ($19.82, down 13.2%) leading the way down.

Dow Chemical also sank to yet another low, closing at $7.41 on a 8.5% decline. It’s the lowest the US chemical major has traded at since 1984.

NOVA Chemicals was one of the only companies to buck the trend, closing at $5.21 for a gain of nearly 300% on news that the International Petroleum Investment Co. (IPIC) plans to buy the company in a $2.3bn (€1.8bn) deal worth $6/share. That would be a premium of almost 3.5 times higher than the company’s Friday close on the New York Stock Exchange.

Also, US paints and coatings maker Valspar rose 3% to $16.49, when its 1Q earnings were in line with expectations and cost-saving measures were announced.

The overall stocks slide came largely due to concerns and uncertainty surrounding the US government’s plans to shore up beleaguered banks, Reuters reported.

Citigroup was in discussions with regulators about a plan for the US government to take a larger ownership stake in the bank, according to The Wall Street Journal.

Stocks initially rallied on the Citigroup news, but fell sharply in mid-day trading with some analysts seeing the Citigroup report as a sign of more economic weakness and a step toward the nationalisation of banks.

On the heels of that news, US banking regulators announced the Capital Assistance Program on Monday morning, which would give more capital to banks as needed and keep large institutions viable through a programme to “stress test” banks while keeping them in private ownership.

The programme, launched in response to nationalisation fears, is set to begin on Wednesday.

($1 = €0.78)

For more on Nova Chemicals, Dow Chemical, Mosaic, Valspar and WR Grace visit ICIS company intelligence
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By: Ben DuBose
+1 713 525 2653

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